Lec 3 Organizational Effectiveness 184

2,888 views

Published on

Published in: Business, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
2,888
On SlideShare
0
From Embeds
0
Number of Embeds
8
Actions
Shares
0
Downloads
84
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Lec 3 Organizational Effectiveness 184

  1. 1. How An Organization Creates Value
  2. 2. Why Do Organizations Exist? <ul><li>To increase specialization and the division of labor </li></ul><ul><li>To use large-scale technology </li></ul><ul><ul><li>Economies of scale : cost savings that result when goods and services are produced in large volume </li></ul></ul><ul><ul><li>Economies of scope : cost savings that result when an organization is able to use underutilized resources more effectively because they can be shared across several different products or tasks </li></ul></ul>
  3. 3. Why Do Organizations Exist? (cont.) <ul><li>To manage the external environment </li></ul><ul><ul><li>Pressures from the external environment make organizations the favored mode for organizing productive resources </li></ul></ul><ul><li>To economize on transaction costs </li></ul><ul><ul><li>Transaction costs : the costs associated with negotiating, monitoring, and governing exchanges between people who must cooperate </li></ul></ul><ul><li>To exert power and control </li></ul>
  4. 4. How Do Managers Measure Organizational Effectiveness? <ul><li>Control: external resource approach </li></ul><ul><ul><li>Method evaluates how effectively an organization manages and controls its external environment </li></ul></ul><ul><li>Innovation: internal system approach </li></ul><ul><ul><li>Method allows managers to evaluate how effectively an organization functions and operates </li></ul></ul><ul><li>Efficiency: technical approach </li></ul><ul><ul><li>Method evaluates how efficiently an organization converts a fixed amount of resources into finished goods and services </li></ul></ul>
  5. 5. Table 1-1: Approaches to Measuring Effectiveness
  6. 6. Measuring Effectiveness: Organizational Goals <ul><li>Official goals : guiding principles that the organization formally states in its annual report and in other public documents </li></ul><ul><li>Mission : goals that explain why the organization exists and what it should be doing </li></ul><ul><li>Operative goals : specific long- and short-term goals that guide managers and employees as they perform the work of the organization </li></ul>

×